MLM Insider – MLM Watch Dog Magazine Feb 1998
It’s War Out There And You’re Next!
By: Paul R. Greenberg
Edwin B. Wainscott
Many of you have heard of FTC’s attack on JewelWay and more recently on FutureNet. Some of you have heard of SEC’s attack on International Heritage.
What these and many (possibly as many as 400) less known Government prosecutions have in common is that the Government has been monitoring and perhaps manipulating your distributors for months. When you first become aware of them, it’s too late or at least, awfully late.
1. The Government compiles a voluminous and seemingly compelling lawsuit, replete with evidence (often resulting from leading questions asked by their agents to overzealous or naive distributors who believe the agents are potential distributors), transcripts (of surreptitiously recorded field meetings) and arguments, and delivers it to a Federal Judge wherever in the country it suits the Government to do so. The Company is unaware.
2. In the vast majority of cases, the Government meets with the Judge on an ex parte basis ex parte (in this case) means that only the Government appears, giving its one-sided conclusionary version of the facts and the law. When doing so, the Government will often submit statements made by your distributors, which the Government represents is how the Company does business. The Company receives no notice and does not know the hearing or meeting is occurring.
3. The Government asks the Judge for a temporary restraining order (essentially, putting the company out of business). Invariably, the Government also asks for the appointment of a receiver (who ousts management from managing and who becomes the Government’s man at the controls) and for a freeze on the assets, including bank accounts, of the Company and often, of its principal officers and shareholders.
4. Guess what? In virtually every case, the Government gets what it asked for:
– a temporary restraining order that brings an immediate, jarring halt
to the business of the company,
– the appointment of a receiver who displaces management of the company and
– a freeze of company and individual assets, including bank accounts.
After all, the Judge has no one in front of him or her to contradict the one -sided Government’s version of facts and applicable law.